Business | Markets

Market regulators strengthen disclosure rules in Saudi Arabia

The move is the latest in a series of steps to tighten regulation of the roughly $400 billion Saudi exchange

Zawya Dow Jones

Published: 18:10 August 25, 2013

Riyadh: Saudi Arabia’s Capital Market Authority on Sunday detailed strengthened requirements for disclosures made by companies listed on the kingdom’s stock market, saying it wanted to ensure transparency in the Gulf’s largest stock exchange.

The move is the latest in a series of steps to tighten regulation of the roughly $400 billion Saudi exchange ahead of any broader opening up to foreign investors. Saudi analysts and private financial executives familiar with the preparations say there has been no indication of Saudi King Abdullah Bin Abdul Aziz Al Saud’s plans on timing of any market opening.

The measures announced by the Capital Market Authority today expand on disclosure rules first adopted in 2006 for companies listed on the Saudi stock exchange, the state-run Saudi Press Agency said.

The toughened measures range from requiring companies to clearly state the topic of required disclosures in each item’s title to requiring companies to give a reason if they fail to state the financial impact of any major announced development. The provisions also stress that companies must report financially critical developments as they occur, according to the statement on the state press agency.

Other measures announced in the last two years have sought to reduce volatility of shares. Brokers and analysts say fear of fast, speculative trading by outsiders is one major concern slowing any decision on opening the Saudi market.

The kingdom currently allows indirect foreign investment through swap agreements.